Friday, June 11, 2010

Contractor Insurance/Pension Reviews (CIPR)

The DoD FAR Supplement (DFASR 242.7301) includes coverage for Contractor Insurance/Pension Reviews (CIPRs) when the contracting officer determines the need for one. Until 2003, the "need" was neatly defined as a contractor with $50 million in sales to the Government under negotiated contracts. In 2003, the particular threshold requirement was removed from the DFARS and placed into "guidance". By moving it from "regulatory" to "guidance", the need for CIPR reviews could be conveniently ignored. The DoD Inspector General looked at how the Government was fulfilling its responsibility and determined that it wasn't. It found $100 billion in pension funds that was being ignored and untold self-insurance and other insurance costs receiving inadequate oversight. Even when the Government took issue with one or more aspects of pension and insurance plans, the IG found that the Government did not effectively followup on those issues to ensure the Government's interests were protected.

Today, DoD issued a proposed regulation to move the threshold requirement back into the DFARS along with some other considerations. Specifically, the proposed regulations require an "in-depth" CIPR when a contractor has $50 million in (qualifying) sales to the Government in its preceding fiscal year and the ACO, with advice from pension/insurance specialists from DCMA and auditors from DCAA determines that a CIPR is needed based on a risk assessment of a contractor's past experience and current vulnerability. When DCAA or DCMA believe that a review should be performed, they advise the ACO. If the ACO concurs, a review should be initiated as soon as possible.

To read the entire proposal, go here. The comment period on this proposed regulation expires on August 10, 2010.

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